"A wise and frugal government which shall restrain men
from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government."
(Thomas Jefferson)

Wednesday, August 3, 2011

American Economy in the Tank as layoffs surge and job growth stalls

When the news hit that Lockheed Martin one of the companies listed in the article was laying off in Denver some of the people inside the company didn't believe it was happening.  Looks like some of them have their heads buried in the sand because if rumors are true, this is only a tip of the iceberg for layoffs/early outs for Lockheed employees which will be moving to other facilities/programs in the future.  The F-35 is fast destroying the company as money is still hemorrhaging in Fort Worth.

We are also hearing that they never solved the weight problem for the Navy version and now the Navy is pushing the US Senate to cancel their version as the Navy will be getting more F-18 Super Hornets with multi-year deliveries through 2015 which is what they wanted from the beginning.  We are hearing the Marine Corps also wants out of the Stoval Version because of the high cost of the plane but so far the Navy and Marine Corps are still part of the F-35 team, but for how long?  All three services are complaining about the high cost of maintenance for various F-35 versions.  Why was Lockheed or any company given two fighters to bring into the inventory one right after the other?

Then we have the British who are considering pulling out of the F-35 for their carriers as the Stoval version has become too costly and are exploring three other options to include the F-18 Super Hornet.

Lockheed-Martin could be in real problems with the F-35 as several Senators McCain and Levin have asked the cost to kill the whole program but probably a better answer would be to have the F-35 for the Air Force only.  Some defense people are advocating ordering more F-22's and killing the F-35.  The F-35 has been a problem for sometime and cost continue to rise along with problems that still have not been fixed yet we have defense groups demanding we keep the F-35.  That is why we have said all along that the DoD needs looked at their programs with a fine tooth comb to find the waste.  We will take a more in-depth look at what is being said about the F-35 during the August Senate/House recess.

One thing is certain and that is lay offs/buy outs in other parts of Lockheed are a matter of when not if.  As one person I talked with recently said "F-35 is sucking the life out of the company" -- just maybe Lockheed would have been smart to keep the old General Dynamics people happy in Fort Worth instead of playing games with their jobs.  Now they are talking about how bad the F-35 really is which is not good for management who keeps saying everything is fine -- what a joke!

Boeing looks to be doing better now that they know they are going to be producing the F-18 Super Hornet over multi-years now instead of having to get a yearly approval since the F-35 is far from being ready for the carriers if it ever makes to to a carrier.  We sure have our doubts from what we are hearing.  Guess you could say the former General Dynamics employees who did such a great job on the F-16 are not happy campers today.

Borders is shutting down across the Country which most likely can be traced to bad management.  Then everyone gets the word that it is 40% off -- not the first week -- it was 10% off and you couldn't use your Borders card to get 10% so why was that a deal.  Borders never figured out to capture a portion of the changing market.  I would rather go to Hastings than Borders any day.  Still waiting for that 40% off to happen.

CISCO stock plunged more than 20% this year and in July announced they are laying off 9% of their workforce and transferring another 7% to one of their companies they are selling.
The move is part of a previously announced plan to streamline Cisco's business in an attempt to clarify the company's role in the tech world. Cisco has struggled to grow in recent quarters, and CEO John Chambers' tone has grown increasingly pessimistic.
Merck & Co to lay off 13,000 employees  traced to the end of patents and generic drugs which benefit the consumer.

Profits on Merck's No. 1 seller, asthma drug Singulair, will be slashed next year when the company's patent expires.  
Albert Wertheimer, a Temple University pharmacy professor, said many companies are laying off workers as big blockbuster drugs lose patent protection in the next few years. 
"What that means is within six months, there'll be 10 or 12 or 15 companies making a generic version of those products,” Wertheimer said. “The originator company will lose probably close to 90 percent of the market on each one of those."

Boston Scientific plans to eliminate 1,200 to 1,400 jobs worldwide during the next 2 ½ years to free money for new investments, the Natick medical device maker’s second major round of cuts since last year.

How many other companies are going to add the total of layoffs for August.  The economy is not getting better but seems to be getting worse as more people face layoffs.  This is only five companies, what about others who are on the edge?  Until the United States Government starts to get some fiscal responsibility we see more landmines ahead in the economic recovery.  
Job growth stalls, layoffs surge
August 3, 2011: 9:34 AM ET 
NEW YORK (CNNMoney) -- The jobs recovery slowed for a third month in a row, according to two reports out Wednesday. 
Private sector employers added 114,000 workers in July, marking a decrease from the 145,000 jobs added in June, payroll processing firm ADP reported. 
That number beat economists' forecasts for 100,000 additional jobs, but it is also taken with a grain of salt by some economists, since ADP's figures have differed wildly from government data this year. In June, ADP's initial numbers topped the government figures by 100,000. 
Meanwhile, a separate report showed more firms are opting to downsize, rather than add to their payrolls. 
The number of planned job cuts surged to a 16-month high in July -- rising 60% in July to 66,414 from June's 41,432, according to outplacement consulting firm Challenger, Gray & Christmas. 
The Challenger report characterized it as a "sudden and unexpected burst" in downsizing. 
Job killing companies 
The data was hardly a surprise though, given a flurry of mass layoffs announced in the last few weeks by Cisco Systems (CSCO, Fortune 500), Merck & Co., (MRK, Fortune 500) Borders, Lockheed Martin (LMT, Fortune 500) and Boston Scientific (BSX, Fortune 500). Those five companies alone accounted for 38,100 planned cuts in July. 
"What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels, including pharmaceuticals, computer and retail," John A. Challenger, chief executive officer of Challenger, Gray & Christmas said in a statement. 
The latest employment data, along with other weak reports, have economists questioning their earlier forecasts for the recovery. 
High gas prices and Japan's earthquake were originally thought to be causing a temporary soft patch in the first half of 2011. 
"If it was a temporary slowdown, they wouldn't actually fire people," said Paul Dales, senior U.S. economist with Capital Economics. "To actually fire people is, to me, a sign that companies believe there is a more permanent slowdown going on." 
Both the Challenger report and the ADP report are known to set the tone for the government's closely watched monthly jobs report due out Friday. 
Economists polled by CNNMoney are expecting 75,000 jobs were added to payrolls in the month. The unemployment rate is expected to stay at 9.2%.  
Source:  CNN Money

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